If It's Not One Thing, It's Another

The WSJ reports that the stocks of shopping mall owners are getting hammered as investors begin to worry about what a recession might mean for the retailers who inhabit them.

A 1.2% sales decline reported for September, the largest drop in three years, will have little immediate impact on mall owners because only a fraction of tenants' leases are tied to sales volumes. However, over several quarters, declining sales translate to weaker retailers, more vacancies and more difficulties for landlords carrying heavy debt loads.

Landlords like General Growth?

...the drain on mall owners' cash flow caused by weakening retail sales will make it more difficult for landlords to pay the interest on their debt and to refinance it. Mall owners are among the most debt-heavy of real-estate investment trusts, with their debt equal to 57% of their asset values, according to Green Street Advisors. Certain debt-laden mall owners such as General Growth have little extra cash flow to spare these days as debt maturities loom.